China feels targeted by USMCA’s ‘non-market’ economy clause

OTTAWA — China says it deplores a controversial new clause in the United States-Mexico-Canada Agreement that calls on the countries to notify each other if they enter into trade talks with a “non-market” economy.

In a scathing statement, The Chinese Embassy in Ottawa says section 32.10 of the new USMCA amounts to an act of political dominance by the U.S., which it blames for inserting the clause some argue gives the Americans a veto over Canada and Mexico pursuing free trade with China.

The Trump administration is embroiled in a trade war with China and has slapped tariffs on hundreds of billions of dollars worth of Chinese goods, prompting retaliation from Beijing.

Now, China says the White House is using the clause in the new agreement with Canada and Mexico to prevent those countries from trading with it.

Without mentioning China specifically, the clause requires an USMCA member country to provide notice and information to the other two partners if it plans free trade talks with a “non-market” economy. It also gives the other partners a say in the text of such a deal.

In a statement to The Canadian Press, Chinese Embassy spokesperson Yang Yundong calls the move “dishonest behaviour” that blatantly interferes with the sovereignty of other countries.

China disputes that it is a nonmarket economy.

“China firmly supports the multilateral trading system with the World Trade Organization (WTO) at its core and props up an open world economy,” said Yang.

“We oppose to fabricating the concepts of ‘market country’ and ‘non-market country’ outside the framework of WTO, which in essence is the excuse made by some countries to shirk their obligations and refuse to meet their international commitments.”

A spokesperson for Foreign Affairs Minister Chrystia Freeland repeated the government’s view that nothing in the new trade agreement would prevent Canada from deepening its trade ties with other countries.

Derek Burney, a veteran of Canada’s continental trade wars, blames Peter Navarro, one of U.S. President Donald Trump’s top trade advisers, for pushing China considerations into the text of the USMCA.

“He is mercantilist, protectionist hawk in the administration with strong anti-China convictions,” said Burney, who was a key player in the Brian Mulroney government that negotiated the original Canada-U.S. free trade deal and the followup NAFTA that included Mexico.

Burney said he’s not convinced the controversial clause has any teeth to prevent Canada from moving forward economically with China “as assertively” as possible.